A government-struck expert panel is calling for new “super-deduction” tax credits as a carrot for Canadians to park their retirement savings in climate-conscious investments.
The federal Expert Panel on Sustainable Finance’s report Friday to Finance Minister Bill Morneau says the government should let people deduct more than 100% of retirement contributions they put into investments such as bonds that help reduce greenhouse-gas emissions.
The panel expects the deduction would be an incentive for the many Canadians who don’t max out their retirement-savings allowances and tax-free savings account contributions, while those who do should have extra space for green investments.
The ideas are part of a broader vision of regulatory changes the panel prescribes for combining Canada’s environmental goals and economic growth.
Businesses should be required to disclose more about the financial risks climate changes pose to their bottom lines, the report says, and pension plans should have to show how climate-related issues are considered in their investments.
But the panel says the government must set a plan that extends to the middle of the century, outlining investments that need to be made to hit emission goals and the cost of a carbon tax for years to come so businesses and investors have predictability.
The report contains 15 recommendations to bring sustainable finance into the mainstream.
“The financial sector is not going to solve climate change, but the things that are—innovation, clean electricity, deep building retrofits, climate-resilient infrastructure and more—all require investment, and that’s where finance is critical,” said Tiff Macklem, former senior deputy governor at the Bank of Canada and chair of the expert panel, in a statement.
“For Canada to be competitive in a world that is increasingly concerned about sound environmental stewardship, sustainable finance needs to become business as usual in the Canadian financial services industry.”